CATRIONA PEAT AND DAVID KERR EXECUTORS OVER THE ESTATE OF THE LATE MARGARET GILFILLAN COLQUHOUN PEAT AGAINST ASSEMBLY THEATRE LIMITED

OUTER HOUSE, COURT OF SESSION

[2014] CSOH 144

PD1754/13

OPINION OF LORD DOHERTY

In the cause

CATRIONA PEAT and DAVID KERR, executors over the estate of the late Margaret Gilfillan Colquhoun Peat

Pursuer;

against

ASSEMBLY THEATRE LIMITED

Defenders:

Pursuer: Middleton; Slater & Gordon

Defender: Pugh; Simpson & Marwick

25 September 2014

Introduction

[1] The late Margaret Gilfillan Colquhoun Peat (“the deceased”) died on 12 January 2013. The pursuers are the deceased’s executors. The first pursuer is the deceased’s daughter.

[2] The pursuers aver that the deceased sustained personal injuries when she fell at the defenders’ premises in George Street, Edinburgh on the evening of 6 August 2010; and that the accident was caused through the defenders’ fault. They seek damages in respect of the loss, injury and damage which the deceased suffered. The deceased’s subsequent death was as a result of an unrelated medical condition.

[3] The summons in the present action was served on the defenders on 5 September 2013. The pursuers ask the court to exercise the discretion conferred on it by section 19A of the Prescription and Limitation Scotland Act 1973 to allow the action to proceed though commenced after the expiry of the triennium. The matter came before me for debate on the Procedure Roll.

The prior action

[4]Very soon after the accident the deceased consulted Quantum Claims (“QC”). She intimated her claim for damages to the defenders on 20 September 2010. The defenders’ insurers investigated the claim. The insurers advised QC on 31 March 2011 that their investigations were complete and that they were denying liability. On 26 July 2011 QC instructed Slater & Gordon, Solicitors (S & G) to act on behalf of the deceased. On 16 December 2011 S & G instructed counsel to consider the papers and draft a summons. In fact, counsel suggested some further lines of inquiry which S & G and QC put in hand. Papers were returned to counsel on 26 February 2013 with instructions to draft a summons. The summons was duly served on the defenders on 26 March 2013. The defenders entered appearance and intimated defences on the 29 April 2013.

The period between 20 May 2014 and 6 August 2014

[5] Unknown to QC or S & G, the deceased had died on 12 January 2013. By letter dated 20 May 2013 the defenders’ solicitors wrote to the S & G advising that it appeared from the medical records that the deceased had died in January of that year. On 28 May 2013 QC telephoned the first pursuer, who confirmed that the deceased had indeed died. QC ascertained from her that she and the second pursuer were executors of the deceased. The first pursuer indicated to QC that she wished to continue with the claim against the defenders. QC requested that she send them a copy of the death certificate and proof of her nomination as an executor. On the same day QC informed S & G of the terms of the telephone conversation which they had had with the first pursuer. On 2 July 2013 QC sent S & G copies of the deceased’s death certificate her will. The will nominated the pursuers as her executors.

Raising the current action

[6] On 28 August 2013 S & G instructed counsel to draft a summons at the instance of the pursuers. They received it from counsel the next day. S & G requested that QC obtain the second pursuer’s instruction to proceed with the action. The second pursuer gave those instructions. The summons was served on the defenders on 9 September 2013. The pursuers were confirmed as executors some weeks later.

The Pleadings and the Joint Minute

[7] In terms of a Joint Minute (15 of process) it was agreed:

“… that for the purposes of the Procedure Roll discussion…the Court, in exercising its equitable discretion can consider:

(i) the Chronology, lodged at No. 14 of Process.

(ii) the pursuer’s productions nos 6/4 to 6/45, which are what they bear to be”

It is not necessary for the purposes of this Opinion to rehearse the whole contents of those documents. The salient elements are set out above.

[8] The pursuer’s averments include the following passage:

“Stat. VI …..Beyond the loss of their statutory defence … the defenders have not sustained and will not sustain any prejudice. The claim was intimated to them very soon after the accident and was fully investigated by their insurers by 31st March, 2011. The original action, purportedly at the instance of the deceased, was raised well within the triennium and is in virtually identical terms to that in the current case. The pursuers have no reasonable prospects of success in a claim against their agents, who had no reason to anticipate the death of the deceased before the original action was timeously raised. In all the circumstances, the Court should exercise its equitable discretion in terms of Section 19A of the 1973 Act and allow the action to proceed out of time.”

The defenders aver:

“Ans. 6 … With reference to the pursuers’ averments anent s. 19A, on the hypothesis of fact asserted, the pursuers likely have an alternative remedy against their agents … they were aware of the death of the deceased well within the triennium…They knew or ought to have known then that the action raised in the name of the deceased was incompetent, it having been raised after her death. They knew or ought to have known that an action in the name of the deceased’s executors would be required. Had they appreciated so, an action could have been raised in the name of the present pursuers prior to the expiry of the triennium. With regard to prejudice, the death of the deceased is likely to lead to same. Matters of inter alia sole fault, contributory negligence and causation are likely to be difficult to deal with in the absence of the deceased…”

[9] Chapter 31 of the Rules of Court provides:

“ Minutes of sist

31.1.-(1) Where a party dies or comes under legal incapacity while a cause is in dependence, any person claiming to represent that party or his estate may apply to the court by minute to be sisted as a party to the cause….

Death of party: further provisions

31.3. -(1) Subject to rule 43.20 (Rights of Relatives to Damages (Mesothelioma) (Scotland) Act 2007), as soon as reasonably practicable after the death of a party, any agent who immediately prior to the death was instructed in a cause by that party shall notify the court of the death.

(2) The notification under paragraph (1) shall be by letter to the Deputy Principal Clerk and shall be accompanied by a certified copy of the death certificate relative to the deceased party.

(3) The letter shall include an estimate of the length of time required for confirmation to the deceased party’s estate by an executor.

(4) On receipt of the letter, the Deputy Principal Clerk shall place it in the process and shall place the cause before a Lord Ordinary in chambers.

(5) The Lord Ordinary may, if satisfied that the party has died and after considering the estimate provided under paragraph (3), pronounce a sist in the cause for a specified period of not less than three months.… “

On 6 June S & G intimated to the defenders a motion to sist the action pending the appointment of an executor. On 12 June 2013 the court motions team informed S & G that the motion had been dropped because a certified copy death certificate and a letter requesting a specific period of sist pending the appointment of an executor were required. S & G duly informed the Deputy Principal Clerk of the deceased’s death and provided the certified copy death certificate and requested information. On 8 July 2013 they intimated to the defenders’ agents their intention to re-enrol the motion to sist the cause pending the appointment of an executor. The motion was not opposed. On 11 July 2013 the cause was sisted for a period of 2 months pending the appointment of an executor. On 19 August 2013, notwithstanding the sist, the defenders’ agents intimated adjustments to the defences. The new averments were to the effect that as the pursuer had been dead for two months prior to the action being raised the action was incompetent. S & G sought the advice of counsel. He confirmed that the action was a nullity. By interlocutor dated 3 December 2013 the action was dismissed of consent.

The parties’ submissions

[10] It was common groundthat the onus was on the pursuers to satisfy the court that the equitable discretion ought to be exercised in their favour, but the parties found it convenient that the defenders opened the debate.

Submissions for the defenders

[11] Mr Pugh submitted that the pursuers should not be granted leave to bring the action late. It was likely that the pursuers would have an alternative remedy against S & G which would have reasonable prospects of success. After their discovery of the deceased’s death S & G had taken steps on behalf of the executry estate with a view to sisting the executors as pursuers in the action which had been raised by the deceased. They had been instructed by QC to do that, and QC had been acting as agents for a disclosed principal - the first pursuer. S & G had misunderstood the law. Any reasonably competent solicitor exercising ordinary care would have realised that where a purported pursuer was dead at the time of raising an action the action was a nullity. He would have advised the executors accordingly. The situation was “very little different” from the ordinary s. 19A scenario where solicitors had failed to raise an action timeously. The availability of the alternative remedy with reasonable prospects of success was the critical factor in balancing the equities here. Other, less weighty, factors were that the unavailability of the deceased as a witness could be prejudicial to the defenders, and the fact that the defenders would be likely to incur some irrecoverable expenses even in the event of success. Reference was made to the following authorities: Carson v Howard Doris Limited 1981 SC 278; AS v Poor Sisters of Nazareth 2008 SC (HL) 146; Nimmo v British Railways Board 1999 SLT 778; Donald v Rutherford 1984 SLT 70; Forsyth v AF Stoddart & Co Limited 1985 SLT 51; Morrice v Martin Retail Group Limited 2003 SCLR 289; Fleming v Keiller 2006 CSOH 163; Wilson v Telling (Northern) Limited 1996 SLT 380; Bates v George and others 2012 CSOH 102; McFarlane v Breen 1994 SLT 1320; Stephen v North of Scotland Water Authority 1999 SLT 342; Stephen v North of Scotland Water Authority “No 2” 2000 GWD 1-29; and Hill v McAlpine 2004 SLT 736.

Submissions for the pursuers

[12] Mr Middleton submitted that this was a case where the equities favoured allowing the action to proceed though out of time. It was not a stale claim. The deceased had intimated her claim within 6 weeks of the accident. The defenders had fully investigated it and liability had been denied. The purported action on behalf of the deceased had been raised within the triennium (cf. McFarlane v Breen, supra). S & G had not been in breach of the duties that they had owed to the deceased. The delay in raising the action had been explained. There had been no dilatoriness or culpable inaction on the part of the deceased, S & G, QC or the pursuers. S & G had proceeded on the basis that an action had been duly raised within the triennium and that the appropriate procedure was for the executors to be sisted as pursuers in that action once they had been confirmed. That would indeed have been the appropriate procedure if the deceased’s death had been after the action was raised. It was a relevant consideration that the defenders had not raised any issue with S & G prior to the expiry of the triennium as to the procedure that S & G were following. It had not been incumbent upon them to speak up even if they knew at that stage that the procedure was inappropriate; but the existence of such knowledge would be one of the factors which went into the balance. If, on the other hand, they too had thought that the appropriate procedure was being followed it suggested that it would be wrong to be unduly critical of S & G.

[13] There had been a mistake on S & G’s part. They had not considered or realised the legal significance of the deceased having died before her action was raised. However non constat that the pursuers would have a remedy against S & G in respect of that error which would be satisfactory or have reasonable prospects of success.

[14] It was not evident that at the material time S& G had owed the pursuers any duty. The pursuers had not instructed them to act on their behalf; nor had S & G assumed responsibility towards them in relation to their claim (Hedley Byrne & Co Limited v Heller & Partners Limited 1964 AC 465); nor would it be fair, just and reasonable to conclude that S & G had owed them a duty of care in respect of that matter (Caparo Industries Plc v Dickman and Others 1990 2 AC 605).

[15] Even if at the material time S & G had owed a duty of care to the pursuers or the executry estate to take reasonable care to preserve their claim, it was questionable whether S & G had breached that duty. They had not realised prior to the expiry of the triennium that the action raised by the deceased had been a nullity; but it was, at the very least, moot whether that was a mistake which no ordinarily competent solicitor exercising ordinary care would have made (Hunter v Hanley 1955 SC 200; Stephen v North of Scotland Water Authority, supra; Stephen v North of Scotland Water Authority (No. 2), supra; Hill v McAlpine, supra).

[16] The pursuers found themselves in the position they were in as a result of an honest and understandable mistake by S & G. Making them pursue the suggested alternative remedy would involve them raising an action where the prospects were fraught with difficulty. Even if the liability difficulties could be overcome the pursuers would not have any recoverable loss. They could not sue for diminution in the value of the executry estate (Matthews v Hunter & Robertson Ltd 2008 SLT 634 at paragraphs 35 and 40). In the event that there was a recoverable loss any damages they could recoup from S & G would be less than could be obtained were they to succeed in the present action after proof (McCann v Waddell & McIntosh Solicitors [2014] CSOH 15; McCrindle Group Limited v Maclay Murray & Spens [2013] CSOH 72; Smith v Lindsay & Kirk (No.2) [2002] SLT 335; Campbell or Pearson v Imray [2004] PNLR 1). They would also have the considerable delay, expense and inconvenience of such an action.

[17] The defenders would not be prejudiced by leave being granted apart from the loss of the time-bar defence. There was no substance in their complaint that they would be prejudiced because the deceased had died. Their position at a proof would be no different from what it would have been had the action been raised timeously.

[18] In addition to the authorities already mentioned reference also was made to Johnston, Prescription and Limitation (2nd ed.), Chapter 13.

“Where a person would be entitled, but for any of the provisions of section 17, 18, 18A, or 18B of this Act, to bring an action, the court may, if it seems to it equitable to do so, allow him to bring the action notwithstanding that provision.”

It is well established that the court’s s. 19A discretion is unfettered: Donald v Rutherford, supra. In that case Lord Cameron went on to observe (at p. 75):

“But while the discretion is, in my opinion, unfettered, it must necessarily be exercised within certain limits and those limits must be as set by the circumstances of the particular case. The relative weight to be given to any particular circumstance must be for the court required to exercise the discretion to determine. The language of s. 19A, in my opinion, plainly carries the implication that it is for the pursuer in such a time-barred action to satisfy the court of the equity of his claim to be allowed to proceed, and consequently for the court to proceed from that point of departure. At the same time equity requires that an equitable decision should be one which proceeds on a fair balancing of the interests and conduct of the parties and their advisers, as well as the nature and circumstances and prospects of success in pursuit of the time-barred claim itself. But the attention to be paid and the weight to be given to these various considerations are for the court vested in this jurisdiction, as well as the balancing of the degree of prejudice which either party may be expected to suffer according as the court decides.”

[20] In the present case there is no substantial disagreement as to the facts. Both counsel asked me to approach matters on the basis of the pleadings together with the agreed correspondence and the chronology of events. Neither wished a preliminary proof. Neither argued that such a proof was necessary to determine the section 19A issue (cf A v N supra, at paragraph 14). Both approached matters on the basis that, in the circumstances of this case, the availability or non-availability of a satisfactory alternative remedy against S & G was likely to be the decisive factor.

[21] The pursuers have provided an explanation for the action not having been raised until after the expiry of the triennium. The circumstances do not disclose any personal fault on their part. Such criticism as was advanced was directed to the conduct of S & G. The deceased’s claim had been intimated expeditiously to the defenders and their insurers had fully investigated it. The action was raised without delay once S & G realised the mistake they had made.

[22] In my judgement the only prejudice to the defenders of any substance is the loss of the time-bar defence. The other matters founded on by them I regard as deserving of very little weight indeed. I am unimpressed by the suggestion that the unavailability of the deceased to give evidence at the proof is a matter which should weigh in their favour. If the deceased had been the only witness to the accident, and if her death had occurred after the expiry of the triennium, the point might have had more force. However, as she died before the expiry of the triennium the defenders are in no different a position than they would have been had the action been raised timeously. Besides, I am not persuaded that the defenders will suffer any material disadvantage - if anything her unavailability may be more of a handicap to the pursuers. The suggested prejudice that the defenders may have irrecoverable expenses even in the event of success is a factor which merits very little weight (the defenders are insured and the pursuers are not legally aided).

[23] A factor of much greater significance is whether the pursuers have an alternative remedy against S& G which has good prospects of success. In A v N 2009 SC 449 the First Division opined at paragraph 10:

“10. As counsel for the respondent acknowledged, the possibility of an alternative remedy against a legal advisor is a relevant factor to be taken into account – together with the prospects of such a remedy – when the court comes to exercise its equitable jurisdiction. In Anderson v Glasgow District Council (p25) the Second Division held that the sheriff had erred in thinking that the factor that there might be an alternative remedy could only have weight if he was able to say that the pursuer was almost certain to succeed in such an action. It also criticised an apparent treatment by the sheriff of that aspect of the matter as conclusive. It continued:

‘As pointed out in Forsyth v AF Stoddart & Co Limited the broad question is: where do the equities lie? And there are a number of factors which fall to be taken into account.’

In Forsyth Lord Justice Clerk Wheatley had said (p55):

’In my opinion it is not illegitimate to have in consideration the strength of the case against the third party and the likelihood of a successful prosecution of such a case, but again that is just a factor.’

11. In the present case the respondent has received professional advice, including advice from a practitioner experienced in what was to be expected of solicitors in the particular circumstances presented in 1999 and subsequently, which has allowed her to raise, for a protective basis, proceedings against her former solicitors…While the respondent’s prospects against her former solicitor seem prima facie favourable, her prospective case is not as straightforward as some – such as where a solicitor expressly instructed to pursue a civil claim has manifestly failed to meet a statutory time limit. Hers is not a “cast-iron” case (cf Thompson v Brown t/a George Albert Brown (Builders) & Co). While the Lord Ordinary may have undervalued the respondent’s prospects of success against her former solicitors, he was correct to hold that any right she had in that respect was not conclusive but only a factor to be taken, with other factors, into account…”

Thus, the existence or non-existence of such a remedy is not decisive in every case. However, I agree with counsel that it is the critical issue in the whole circumstances of the present case. I turn therefore to examine the submission that the pursuers have a satisfactory alternative remedy against S & G which has good prospects of success.

[24] The first question is whether S & G owed a duty of care to the pursuers for any part of the period between the deceased’s death and the expiry of the triennium. Mr Pugh maintained that they did. They had been instructed by QC to act for the first pursuer - at the material time they had been retained to act on her behalf. That was the basis upon which Mr Pugh maintained that a duty of care to the pursuers arose. He did not argue that there had been a voluntary assumption of responsibility towards the pursuers by S & G. Nor did he argue that in the circumstances it would be fair, just and reasonable to impose upon S & G a duty of care towards the pursuers.

[25] In my opinion it is arguable that S & G were retained to act on behalf of the first pursuer qua executor(from 2 July 2013, but possibly from as early as 28 May 2013), and that from the date of the retainer they owed a duty of care to her and to the executry estate. As Mr Pugh did not found upon the existence of a duty of care arising other than as a consequence of a retainer it is unnecessary to express a view on the submissions made by Mr Middleton dealing with other possible bases for such a duty. Accordingly, I restrict myself to observing that the establishment of either of them in the circumstances of this case would not be free from difficulty.

[26] If a duty of care was owed to the estate, the next issue is whether no ordinarily competent solicitor exercising ordinary care would have failed to realise that the deceased’s action was incompetent, and would have failed to advise that the executors would require to raise an action prior to the expiry of the triennium. I think it is arguable that no such solicitor would have failed in those respects: but there is a respectable argument to the contrary. S & G’s error was not of the same nature, or as egregious, as the more commonly encountered scenario involving failure by a solicitor to raise an action within the triennium. It was much less blameworthy than that.

[27] Mr Middleton maintained that even if S & G were in breach of duties owed to the pursuers the latter would have no recoverable loss. I disagree. On the suggested hypothesis the breach relied upon by the pursuers would be breach of a duty which S & G owed directly to them as executors. None of the cases I was referred to is authority for the proposition that such a loss is irrecoverable. In my opinion it is clear that it would be recoverable (see e.g Lord Carloway in Mackintosh v Morrice's Exrs 2006 S.L.T. 580 at paragraph 12 where he cites negligence towards an estate after death as being an obvious example of a case where it is competent for executors to claim for losses to the estate; by contrast in Matthews the issue was whether a duty of care was owed during the deceased’s lifetime by her solicitors to her future executors).

[28] Assessing the prospects of success of an action by the pursuers against S & G is largely a matter of impression. In my opinion, for the reasons already discussed, it would not be straightforward. While there would be an arguable case, in my view the prospects of success would be neither good nor reasonable. The risks of failure are such that the pursuers (who do not have the benefit, or protection, of being legally assisted persons) would have to think long and hard about the merits of litigating.

[29] Even if the prospects were considered by the pursuers to be sufficient to litigate, it would be a far less satisfactory option than being allowed to proceed with the present action. There would be consequential delay, expense and inconvenience.

[30] I do not attach any weight to the fact that the measure of damages in the alternative action would reflect the prospects of success of the action against the defenders (had it been timeously brought). That measure of damages would fully compensate the pursuers for the estate’s loss. While a pursuer might contend “I may have got the full value of my claim without any discount if I had gone to proof and succeeded”, that is not the correct way to value his loss where his prospects were less than certain. The reasoning of a defender who says “the pursuer might have failed to establish liability, so he has no loss” is similarly flawed. In this connection I agree with the view expressed in Johnston, supra, at paragraph 13.17. Of course, it is a consequence of the very uncertain prospects of success of the suggested alternative remedy against S & G that those prospects would be reflected in any settlement offer made by S & G’s insurers (if indeed any offer were to be made). The only way the pursuers could recover the full value of the lost claim would be for them to run the very substantial risks of proceeding to proof.

[31] In the whole circumstances I am satisfied that it is equitable that the pursuers be allowed to bring the present action against the defenders. I shall exercise the discretion conferred by section 19A accordingly. I reserve meantime all questions of expenses.